Key Points
- ECB official Piero Cipollone stresses the need for a digital euro in response to Trump’s global stablecoin push.
- Trump’s executive order promotes the worldwide use of U.S. dollar-backed stablecoins.
- A digital euro would provide a secure ECB-backed payment option with limited holdings and no interest.
- The ECB is currently experimenting with a digital euro but awaits legislative approval.
Eurozone banks must develop a digital euro in response to U.S. President Donald Trump’s recent push to expand the use of stablecoins, according to European Central Bank (ECB) board member Piero Cipollone. Speaking at a conference in Frankfurt on Friday, Cipollone emphasized that Trump’s executive order, which aims to promote dollar-backed stablecoins globally, could draw more customers away from European banks, increasing the need for a euro-based digital currency.
Trump’s executive order, issued on Thursday, outlined a comprehensive cryptocurrency strategy with a key focus on supporting the growth of stablecoins worldwide. Stablecoins are digital assets pegged to official currencies—most commonly the U.S. dollar—providing exposure to short-term interest rates similar to money market funds.
Cipollone highlighted the global nature of Trump’s initiative, warning that eurozone banks risk losing revenue and clients as stablecoins become more widely used. He argued that a digital euro could help counterbalance this trend by offering a secure, ECB-backed payment solution that could be accessed even by those without traditional bank accounts.
A digital euro would function as an online wallet guaranteed by the ECB, though it would be operated by private sector companies such as banks. Unlike stablecoins, it would likely come with restrictions, such as holding limits of a few thousand euros and a lack of interest payments.
Despite the potential benefits, eurozone banks have expressed concerns that a digital euro could result in customers moving their deposits to ECB-backed wallets, potentially weakening the traditional banking sector. However, Cipollone stressed that a digital euro would be crucial to maintaining the competitiveness of the European financial system.
The ECB is currently conducting experiments to assess the feasibility of a digital euro, but a final decision will depend on approval from European lawmakers. Meanwhile, Trump’s order explicitly prohibits the U.S. Federal Reserve from launching its own central bank digital currency (CBDC).
Countries such as Nigeria, Jamaica, and the Bahamas have already launched digital currencies, while 44 other nations—including Russia, China, Australia, and Brazil—are testing their digital currency solutions.
